Tax season is in full swing income tax bracket. In fact, income tax returns are due in just over a month. (This year, the IRS has moved the tax deadline from April 15th to April 18th.) For some folks, that means it’s time to pull out the reference books and devote a weekend to processing paperwork. For others, it means paying somebody else to crunch the numbers — preferably as cheaply as possible. Still others look for free options (such as Free File). And, of course, many people have already filed and received their tax refund!

Over the past month, MoneyRates and Get Rich Slowly have run a joint poll asking how readers intend to prepare their next tax return. Of the more than 2200 respondents:

62% plan to file the return themselves using software

23% intend to pay somebody else to prepare the tax return

10% will file their return themselves by hand

5% have a friend or family member who will provide free help

If you’re considering a tax-preparation service, be prepared for a wide range of pricing — anywhere from free for a basic 1040EZ with no fancy pants features to $400-plus for a complex return with investments, business income, rental income, and so on.

Of course, there’s much more to picking a tax preparer than finding the lowest price. The more you know about what’s available, the more confident you’ll be about weighing the trade-off between cost and level of service. For many people, using the right tax prep service saves more money — sometimes a lot more — than the cost of the service!

Tax preparation: What’s at stake?

If you earn an average income, you’re likely to pay hundreds of thousands of dollars in income taxes over the course of your lifetime, whether you’re actively earning income, or withdrawing from your tax-deferred retirement fund. With numbers this big, getting your taxes right can make a huge difference to your finances.

To look at this another way, tax evasion is punishable by up to five years in prison and a $250,000 fine — and you’re responsible for your taxes, no matter who prepares them. In short, it’s very important to get the right tax-preparation help.

How to choose a tax-preparation service

One of the basic choices you’ll face is whether to use an online service or visit a tax preparer for some in-person advice. In each case, costs vary greatly. But as you’ll see, online services are often a lot cheaper.

On the other hand, the personal touch can be valuable. A discussion of your situation, rather than simply filling in fields on a computer screen, can help you identify deductions you might not have thought of, or prompt you to make different tax-related decisions in future years.

An in-person tax preparer might be more helpful to you if the IRS comes calling with questions. Be advised, though, that only a lawyer, CPA, or Enrolled Agent (a tax advisor registered with the federal government) can represent you in front of the IRS on tax matters.

Before you start comparing prices, you should determine which level of service is right for your needs, so you can concentrate your search within that type of service.

When you start looking for tax-preparation help, you may be surprised by the variety of different firms out there, from nationally-known organizations to mom-and-pop outfits with names like “Bart’s Tax Service.” There’s nothing wrong with using Bart’s Tax Service, nor is a well-known name a guarantee of quality. In any case, check the service with the Better Business Bureau, and do some research online to see what comments other customers have made.

Free tax preparation services

Yes, it’s possible to get your taxes done for free — if you meet certain conditions:

Simple return. Several online options, and even a couple of in-person services, offer free tax preparation of federal returns. These free services typically limit you to Form 1040-EZ or Form 1040 with no itemized deductions, interest income, or other complications.

Income limits. Some free services require your adjusted gross income (AGI) to be below a certain level.

D.I.Y. Another free option is to do your taxes yourself. The IRS website offers the same fillable forms and step-by-step instructions used by most tax-prep services. If you file state income tax, you’ll need the appropriate state forms and instructions from your state treasury department or equivalent.

Getting a state return done in conjunction with a free federal return starts at $8 to $40 online, and around $40 in person.

Online tax preparation software

Online tax-preparation software assists you in completing and submitting the necessary forms. Intuit’s TurboTax, probably the best-known software package, starts at $29.95 for the basic federal return, plus $39.95 for the state return, plus an additional $19.95 to e-file that state return.

OnePriceTaxes also starts at $29.95 for the basic federal return, but includes an e-filed state return at no additional charge. And TaxACT, from 2nd Story Software, lets you file a simple 1040 for free, but charges $14.95 for the state return, plus $7.95 to e-file the state return.

Software Download – Lowest Advertised Cost

Product (Company Name)

Version

Federal 1040
Simple Price

State
Price

State
e-File

At Home ™ (H&R Block )

Basic

$19.95

$36.95

$19.95

OnePriceTaxes (AFJC Corp)

Tax Software 2010

$29.95

-

-

Tax Act (2nd Story Software)

Free

$0.00

$14.95

$7.95

TurboTax ® (Intuit)

Basic

$29.95

$39.95

$19.95

Notes:
1. Prices shown are lowest online advertised price as of March 11, 2011.
2. Most “Free” services are limited to customers with a certain tax situation.
3. Information is provided for general guidance. Contact provider or visit official website for specific details.

Online tax preparation services

There are many online services that will collect your information to generate and file the necessary tax forms. Be certain to use a secure site to enter your information. (How can you tell if a site is secure? Look for a web address beginning with “https:” and a lock icon or similar in your task bar.)

Most online services that charge for the basic federal tax return charge less for the additional state tax return, and most offer e-filing for free or for a modest additional charge.

Here’s what you can expect to pay:

Basic online services. If your tax picture is extremely simple, the cost ranges from $8 to $30 to prepare and e-file a bare-bones federal return. Adding a state return costs $8 to $34.

Deluxe online services. If you’re in a more typical tax situation, you may itemize deductions and you may have interest and dividend income. Online deluxe services range from $10 to $40 for federal returns, plus $15 to $40 for state returns.

Premium online services. This level of service is for taxpayers with complex tax situations, such as business income, self-employment income, or income from rental property. Online premium services range from $20 to $70 for federal returns, plus anywhere from free to $40 for state returns. A few premium services, such as eTax.com Premium ($49.95 federal, $29.95 state) will bundle a business tax return along with your personal tax return.

The extra cost of a state return drops as the complexity and cost of the federal return increases, because in general, as the federal return becomes more complex, less additional work is required for the state return.

Online Tax Preparation – Lowest Advertised Cost

Product (Company Name)

Version

Federal 1040 Simple Price

State
Price

State
e-File

1040.com (HBS Financial Group Ltd)

Simple

$0.00

$29.95

$0.00

1040Now

Free File

$0.00

$17.95

-

123EasyTax

Federal Tax Return

$0.00

$14.95

$0.00

At Home ™ (H&R Block )

Free

$0.00

$27.95

$0.00

CitizenTax (Smokey Software, Inc)

-

$18.88

$19.99

$0.00

CompleteTax (CCH)

Basic

$0.00

$29.99

$0.00

efile.com

Free Federal

$0.00

$19.95

$0.00

EfileTaxReturns.com

Free Federal Tax Return

$0.00

$22.95

$0.00

eSmart Tax (Liberty Tax)

Basic

$0.00

$19.95

$0.00

etax.com

Free

$0.00

$29.95

-

ExpressTaxRefund.com

Basic Return Package

$29.95

$20.00

$20.00

ezTaxReturn.com

Free Federal
Return

$0.00

-

-

FileYourTaxes.com

Free Tax

$0.00

$33.50

$0.00

Free1040TaxReturn.com

Free federal tax return

$0.00

$39.95

$0.00

FreeTaxUSA (Tax Hawk, Inc)

Free Edition

$0.00

$9.95

$0.00

I-CAN! FreeFile
(Legal Aid Society of Orange County)

Free File

$0.00

$0.00

$0.00

Jackson Hewitt

Basic

$0.00

$29.95

-

OLT OnLine Taxes

1040EZ Simple

$7.95

$7.95

$0.00

OnePriceTaxes (AFJC Corp)

Federal and/or State Taxes

$7.95

$7.95

$0.00

OnlineTaxPros

Free File

$0.00

$14.95

-

RapidTax (Rapid Filing Services LLC)

Basic Package

$9.99

$19.99

$0.00

Tax ACT (2nd Story Software)

Free Edition

$0.00

$14.95

$7.95

Taxbrain (Petz Enterprises, Inc)

1040EZ Tax Package

$14.95

$29.95

-

TaxSlayer

Free Edition

$0.00

$14.90

-

TaxHawk

Federal Tax Return

$0.00

$0.00

$0.00

TaxSimple

Basic

$0.00

$24.95

-

TurboTax ® (Intuit)

Free Edition

$0.00

$27.95

$0.00

Notes:
1. Prices shown are lowest online advertised price as of March 11, 2011.
2. Most “Free” services are limited to customers with a certain tax situation.
3. Information is provided for general guidance. Contact provider or visit official website for specific details.

In-person tax preparation services

Like online tax preparation services, the costs for in-person services vary depending on the complexity of your tax situation. Unlike online services, prices also vary widely with location. As of February 2011, base prices for in-person federal returns in the interior of the U.S. (Reno or Little Rock, for example) range from free to about $40, plus up to an additional $40 for a state return. But if you live in Los Angeles or Manhattan, expect to pay anywhere from $100 to $400+, plus up to another $40 for the state return.

Some H&R Block walk-in locations will prepare and file your federal 1040 form for free if you meet requirements and also file (and pay for) a state return.

Professional Tax Preparer – Range of Quoted Costs

Company

Type

Manhattan

Little Rock

Reno

Los Angeles

H&R Block

Federal
State

$119.00
$39.50

$50.00
$29.00

$0 – $39
n/a

$0 – $99
$39.00

Jackson Hewitt

Federal
State

$150.00
Free

$38.00
$37.00

$38 – $79
n/a

$75.00
$50.00

Liberty Tax

Federal
State

$220.00
Free

$180.00
Free

$100.00
n/a

$50 – $400+
Free

Individual Tax Preparer

Federal
State

$120 – $150
Free

$100.00
Free

$60.00
n/a

$50.00
Free

Notes:
1. Prices shown were obtained through telephone interviews in February 2011.
2. Most “Free” services are limited to customers with a certain tax situation.
3. Information is provided for general guidance. Contact provider for specific details.

Tip: The IRS website is generally very useful, which may come as something of a surprise. For instance, here’s some advice containing tips for choosing a tax preparer.

State tax returns

If you live and work in Alaska, Florida, Nevada, South Dakota, Texas, Washington or Wyoming, congratulations — you don’t have to worry about state taxes.

Otherwise, you’ll probably have to file a state tax return. (And if you’re lucky enough to live in New York City or certain Ohio cities, you’ll also file a city personal income tax return with the applicable state.)

If you had income from multiple states, you may be required to file in more than one state, and this will likely cost you additional tax preparation fees for each state.

The takeaway

As a general rule, online tax preparation makes the most sense for relatively simple tax returns. You may benefit from in-person advice for more complex situations. However, that in-person advice is only as good as the qualifications of the person giving it. Here are some things to look for:

Professional designations. A CPA, tax attorney, or Enrolled Agent is a plus.

Full vs. part-time. Many tax preparers work seasonally, but people with complex tax situations often need advice throughout the year.

Audit experience. Some successful IRS audit experience can be a plus; multiple instances of audits that went against the taxpayer should be a red flag.

What’s the bottom line? Perhaps the most important decision in choosing tax-preparation help is fitting the service to your needs. Depending on your situation, free advice can be a tremendous bargain — or it could be the most costly mistake you’ve ever made. Know your tax situation, and get appropriate help if you need it.

OOPS! Due to an error in the data source, quotes for the “Individual Tax Preparer” row in the last table were inadvertently labeled “CPA”. These were, in fact, prices from individual tax preparers who were not necessarily CPAs.

I did my own taxes this year using the online version of TurboTax. I think it cost me $112 dollars including both my federal and state return. I have rental properties and a few other complicated situations and I found this product more than adequate to handle those items.

I think that if it all possible, people should attempt to do their own taxes (even using software or an online product). You learn a lot about the tax code, and about ways to optimize your tax situation for the following years.

We are in your situation and always talk about trying to do it ourselves. We have gone to the same tax preparation fellow for years. We pay $435 each year and always feel it is way too much!! “There must be another way” Ty for sharing…..

I was paying $195.00 to have my axes copleted by a CPA. I thought that was too much money to spend when all he did was just enter my information into his software on his computer. I now pay $65.00 to a book keeper with the same software program and she found my extra savings.
Owen

Cheaper isn’t always better. If you use turbo tax and have a return that is somewhat or very complicated you should know you probably missed something a human would pick up on and left hundreds or thousands of dollars behind that you could have gotten back by going to a professional. The programs do miss things every year because they cannot think and are not able to pick up on scenarios as humans are. The IRS would want everyone to use a computer program or do it themselves because they would save paying back millions of dollars every year.

Federal Free plus $14.95 for state, both e file for free.
Or use the deluxe version $17.95 for both state and federal plus free e file for both. I usually use taxact every year to file my wife and I taxes as well as my four children’s taxes. I have never paid extra to e file state taxes.

You forgot to mention the free tax preparation service offered by the IRS. I have been working with VITA (Voluntary Income Tax Assistance) for three years now, and I am always surprised how few people are aware of this service.

The VITA program has so may things going for it: free, obviously; partial to the taxpayer, since they don’t profit from the service; longevity, since the services, and many of the IRS-trained volunteers serve year after year, as you and I have done; benefit to the community, since refunds flow back to the local economy undiminished by the usurious fees often charged by storefront preparers whose profits go to corporate coffers.

Additionally, these centers offer benefits in other ways by promoting financial literacy and establishing networks of community support involve. Win-win!

Most of the cost of paid preparation lies in the processing cost of untangling the taxpayer’s bookkeeping errors, and hand sorting through many volumes of data to find the handful of it that’s relevant, FWIW.

I just use TurboTax. I’ve noticed that Jackson Hewitt and H&R Block are heavily represented in somewhat rundown neighborhoods. I have a relative whose taxes were completely messed up by H&R Block and he ended up owing thousands in penalties. I don’t know if they’re all like that, but my opinion of them is not very high.

I used TurboTax for the last few years, as most of my returns have been simple. This year I did my taxes by hand for the first time, because I sold stock this year and TurboTax wanted too much money to deal with that complexity. I used the IRS online tool (FreeFileFillableForms) to e-file my returns. It was tricky, and my submission was rejected the first time, but I fixed my mistake and submitted again. Second time’s the charm?

We’ve been happy with TurboTax for the last 5 years, although we’re probably going with a CPA next year due to business income. You can get 10-20% off TurboTax through various bank promotions. State Farm Bank gives TurboTax Deluxe away free to the first 25,000 customers each year for instance, and my local credit union gives 10% off (since I missed the 25,000 this year) Google around for other promotions and coupon codes.

I was wondering where you heard State Farm Bank gives TurboTax Deluxe away free to the first 25,000 customers each year? I have been a state farm employee for several years and have never heard of this? That would be great to be able to tell my customers.

i’m a freelancer in brooklyn with multiple income streams, expenses, a retirement account and some investments. i’m a bit of an airhead, so i pay to get my taxes done professionally in manhattan- i don’t trust my math skills as far as i could throw them. it costs $350, but my cpa is friendly, quick, and answers any questions i have about these things.
i was advised to just pay up and have them done because i’m a relatively new transplant to nyc, and there are fed/state/city taxes and fees to deal with. if i were more dedicated i’d try and learn more, but as it stands i’m sure i’d make plenty of mistakes. i feel much better giving my records to my cpa and letting him do the dirty work.

I use TaxACT, and they give a discount after the first year. This year for state & federal (simple return) I paid $19.90 for everything, including e-filing and archiving my return. If you commit early in the year to using them (they send an email in the fall) then you can get a lower price.

I think TaxACT is the best. I saw very little difference between them and TurboTax, except the price.

I file personal and business (sole proprietor) taxes for my home office (25 subcontractors). I have had the same CPA (in Davis, CA) for 20 years and he charges $500. His CPA company is family-owned and family-staffed. Included in that $500, he is also available year-round for consultation (no charge), his office provides a compilation of yearly IRS changes as well as reminders of deadlines for 1099s to my subcontractors and IRS. What I especially like is the booklet provided each year for me to fill in all my itemized deductions, income, investments, etc., from which he then provides a very well-organized folder with my tax return ready to sign and fax back to him for e-file, including a report showing all the changes from one year to the next. He also provides a list of my quarterly tax due dates, with addressed envelopes and form already filled out for me to submit to IRS. In case of any IRS problems, he would be able to represent me and help me through the process. For me it’s definitely worth the $500, plus it’s a write-off for my business. Over the years he’s also been there when I needed quick advice pertaining to my grown children’s tax situations. And best of all, we’ve developed a friendship over 20 years – priceless.

Whatever you decide, avoid refund anticipation loans at all costs. If you file electronically with direct deposit, you’ll usually get your refund within 10 days or so. It’s just not worth paying the outrageous fees on RALs to get your money a few days sooner.

It cost me $250 to get my taxes done this year, which I’ll pay gladly to avoid problems like last year’s surprise $9,000 bill from the IRS (which I’ve mentioned before).

Also, my tax guy is in Philadelphia and I live in California, so the cost of paying an actual person to do your taxes doesn’t have to be tied so closely to your location. I just scan and email him my W2s and 1099s. He fedexes me back a package with some things I need to sign and mail.

In the last few years, I had to the do the 1040 long form because of some investment losses. (Stupid prosper.com) I’m done with that, and for the foreseeable future, it looks like I’ll be able to get away with using the 1040A. My investments are all in Roth IRA and 401k accounts, but I’ll have student loan interest deductions for awhile.

I won’t pay for e-file. I’ve done my own taxes for awhile now (I advise having a basic understanding of how taxes work — for example, looking at the forms and seeing what kind of deductions may be available to you can be a useful thing) and it’s not that hard to print out the forms, stick them in an envelope, and drop them in the mail.

IMHO, the only reason to pay for efile is to get that refund sooner. However, the smartest thing to do is owe a few $ at tax time, and that filing the forms ASAP just isn’t that big of a deal.

I own my own business, so I would never consider anything other than having my CPA prepare my taxes. I pay him quarterly for his services. The advice he gives me is beyond just tax issues–he has a holistic approach to taxes and business practices. It’s money well spent. I know that I will not have any surprises from the IRS, and I’ve received valuable business advice from him over the years.

“If you had income from multiple states, you may be required to file in more than one state, and this will likely cost you additional tax preparation fees for each state.”

This will actually be my question for next year, but I might as well ask it now while I’m thinking about it. I just moved from Maryland to Virginia. However, I still work in Maryland (and will continue to do so for at least the rest of this year). The Maryland tax form says if I live in VA and did not maintain a place of abode in MD for at least 183 days, I am exempt from Maryland tax withholding. But…
1) Do I take that to mean I am also exempt from filing a return in Maryland next year?
2) What happens to the 12 weeks of state taxes that have already been withheld by Maryland? Do they get sent to Virginia somehow? Do I owe a bunch of money to VA next year but get a correspondingly big refund from MD?

I pay $280.00 at H&R Block in a Twin Cities suburb of Minnesota. I pay way too much and I know it. We always get a huge refund of 3-4k so it doesn’t feel too bad in the moment but really, it’s completely ridiculous. It’s one of the few things that bug me about our finances these days.

If you are a high income earner or have any sort of complexity in your tax returns (dividends, 1099 income, etc.) you will find that the money you spend having your taxes prepared by a CPA who specializes in taxes (not all do) money well spent…and tax deductbile. I say this as a VP of finance for a small company who routinely guesses my tax liability within a $100 before sending my info to my accountant each year. Why? Two sets of eyes are better than one, especially if one of the sets has spent the best part of his or her career studying the nuances of tax law. That same expertise can come in handy during the year if you have a situation that comes up which might impact your taxes. A CPA who has done your taxes for many years will know almost as much about your finances as you do. Finally, should you be audited, your accountant (who has handled more tax audits than the individual tax payer ever will) will take the lead.

That said, if you are a W2 wage earner making mid-five figures, suck it up and do your own taxes, no matter what kind of math phobias you have. What you learn will be invaluable.

I get my taxes done for free by an AARP volunteer. I’ve done this for the last few years, and I couldn’t be happier. I’ve also done my taxes myself, and paid H&R block, but you can’t beat free, professional tax preparation. They provide this amazing service at libraries and community centers, typically. You don’t have to be retired to take advantage of this service! http://www.aarp.org/money/taxes/aarp_taxaide/

I am pretty sure that this service is only available to those over 60 (even though AARP accepts members at age 50), and under a certain income level. Check out the AARP web-site before counting on this free option.

You should consult a tax advisor for an answer specific to your situation, but the first thing I would do is check with your employer to see where your state taxes are now going. There’s a good chance that state tax withholding from a Maryland employer is still going to the state of Maryland. Unless your employer can switch this to Virginia, you’ll want to minimize that withholding and set the money aside throughout the year so you can pay your Virginia taxes.

I’ll chime in with the fans of Tax Act. You get to keep lower rates even if they raise the regular rates. I’ve been using them for years and am grandfathered at their old rate. With the early bird savings I pay $13.99 for deluxe Federal and State e-file. Their site is very comprehensive and they have a lot of help information.

Doing taxes yourself, by hand — without software — is a really scary idea; I never would have considered it 5 years ago. But then I saw my boyfriend do it, and thought, “well, if he can, then so can I!”

It’s time-consuming, especially the first time, but it did teach me a much deeper understanding of how taxes work … so consider the time spent doing it to be an education!

When I started freelancing about 11 years ago, I hired a CPA to do our taxes because I wanted to make sure I did all the self employment stuff correctly. Our taxes are also a little complicated by the fact that my husband owns 1/4 of a house that he inherited (along with some other relatives) in another state. We have had other oddball things pop up in the past few years too (investment losses, IRA conversion to a Roth that then had to be recharacterized and then converted again this year). Honestly, it pains me every year to write the CPA an ever increasing check ($360 this year)but I very much like that I really just gather up information and send it to him in one big envelope and then he does the rest. I also have a little more peace of mind because the house in the other state does cause me some concern from a tax and record keeping standpoint. If it ever gets sold and out of our lives then I probably won’t be as willing to pay someone else to do taxes.

@Dan:
I mis-reported the cost basis for some stock I sold (actually, I think I failed to report it at all, and so the IRS assumed $0). I got my tax guy to fix the problem, and after amending my tax return, I actually ended up with a $9 refund after that. That was *after* I paid $3,000 though.

This year, instead of having a $3,000 tax bill and then making a mistake that resulted in a $9,000 scare and a big headache, I just paid the tax guy to do it all for me from the beginning, and I have a total tax bill of about $250, when I was expecting I’d be paying another $3,000 or so. My tax guy is easily worth his $250 fee.

I have used the same CPA for over 20 years, and the peace of mind is worth every penny. It is not cheap (just under $ 400 this year)but he always finds things that I would never think of. My grandmother left a fairly complicated estate in 1997 and he has always helped with that and other inheritances that have come along.

Unfortunately the tax code is so complex that a lot of people believe they’ve correctly done their taxes and haven’t and just slip through the cracks. Often the errors are in the governments favor. Nobody has a duty to pay more taxes than they owe. I’ve seen a lot of people grossly overpaying for no reason to save a few dollars on the preparation. If you have a relatively complicated return, including a business, rental property, etc. this may be penny wise and pound foolish.

Self-employed and work at home, so I have had a friend of my brother’s do it for the past 10+ years. He is a CPA. He charges $92.00 for federal and state (at least for the past +/- 5 years that has been his rate). I think he is well worth it for my peace of mind knowing I haven’t missed something.

It’s worth it to do your own taxes, by hand or through something like Turbotax, at least once. I know someone who’s dropped off her taxes at H&R Block year after year, and has obviously never looked at her return–because I discovered H&R was doing them completely wrong. Wrong filing status, not claiming EIC even though she was eligible–in short, leaving about $7K on the table. Every year. She never noticed because she didn’t know enough about taxes to be able to spot the errors.

Just another example of why self-sufficiency is usually in your best financial interest…

Our taxes were so very complicated last year… that by the time we’d collected everything we needed to bring to a tax professional, had read up and made sure we understood the laws, had talked to the CPA in the family and the retired person in our family who does volunteer taxes… and had gotten luke-warm recommendations from everybody we knew for accountants… (the best recommendation being to ship all of our tax info half the country away)…

..that we ended up just doing the taxes ourselves with the family CPA’s blessing and TurboTax (though not the base version). He said he didn’t think that any tax preparer that we could find would do a better job.

Right now I’m educating myself on cost-basis calculations when the companies spinoff and merge (I know the bottom-line answer, but they want a cost-basis number), and on how exactly to get the right tax numbers on that Roth conversion that seemed like such a good idea at the time.

Next year our taxes should be back to normal, which will be a big relief (unless I decide to sell the AOL single stock and its time warner former affiliates).

I’d totally be willing to pay someone if I had someone I could trust. But I’ve heard so many stories about accountants messing up that it really does seem easier to do it ourselves with software. That and just collecting the necessary documents is most of the work.

I use a CPA because our taxes are a bit complicated. He always catches things we missed, too. I get the info together so I have to have a pretty good understanding of the tax code. But he does the dirty work and gets the numbers right. And now that I moved from TN to NC I have state income tax to prepare. It’s just a headache I’d rather not deal with and money well spent on a CPA. If you go with an individual or even a local firm you will at least have someone you can bounce questions off of throughout the year. It’s a perk.

I used to have my dad do my taxes every year but I moved overseas for about 14 months and ended up with foreign income statements, foreign tax credits, RRSP homebuyer repayments, etc. My dad told me I had to get an accountant and it was worth the money – if for nothing else than having someone know how the complexities of the varying tax years was going to work out.

I might go back to my dad now that my taxes are going to be “normal” again but may start using UFile or some other online system. I just couldn’t do it with all the complications in my taxes for the past 2 years.

The ~400 I paid last year and again this year are worth it to know there shouldn’t be too many surprises.

@ Richard #28 – thanks for responding. I was just at my HR department today to change my address and file a VA-4 form, so I know that starting with my April 1st paycheck I should have state taxes withheld and remitted to Virginia instead of Maryland.

One other point when you use an outside professional. Make sure that the CPA has liability insurance as protection in case of fraud or incompetence. I prefer to have my CPA’s have an office (home or business, it doesn’t matter) where they have been for a while and I get a great deal of comfort seeing their various diplomas and certifications tacked on the wall. You get what you pay for when it comes to tax preparers which is why it freaks me out that people are willing to give all their personal info to a guy who picks it up and delivers it for only $95. Identity theft, anyone?

@Tyler My tax guy is also in a different state than I am, but he emails me pages to sign and then I scan and email the signed copies back to him. I would far recommend that over mailing!

I paid someone to do my 2010 taxes and I will re-evaluate if the cost is worth it for 2011, but it certainly gave me peace of mind for 2010 with income and retirement accounts in multiple countries, residency changing, dividends, interest, and investment sales. Plus, the cost for him to do my taxes was a little more than one day’s salary, which I would have almost spent doing them myself anyways and my time is worth something to me. I don’t know when I would have found that much time to do my taxes. It was mostly complicated due to the residency changing, so I think it might be simpler next year and I will be able to do it myself. We’ll see.

I used OnePriceTaxes for 2009 and it was a dreadful mistake. The software neglected to include my 1099-MISC forms even though I filled them out. It has no audit function, so you are pretty much on your own to get things right. The help was almost nonexistent so that the experience was akin to just filling out the forms I knew were needed. Also, there was no review function and the print function failed, just couldn’t print, so I had to file with no way to review my return. Once filed I was able to print, but then it was too late. Never again! I went back to TaxCut and had to use it to generate a corrected return.

BTW, while I cannot be sure this is true for the 2010 tax year, the 2009 OnePriceTaxes software was just a framework built around their online system. You had to be online for it to work.

This is a hugely helpful post! One of my challenges when shopping for services is that it’s hard to know what ballpark the prices should be in until you’ve done it a few times. Now I just need to find similar information for legal services!

In Canada your accounting fees MAY be tax deductible in the year you pay them. If you have any kind of investment or business or rental income they are certainly deductible.

The most I have EVER charged for preparing a personal tax return was $1,000 but you should have seen the mess it was in! I actually cut the guy a deal, because it took over 15 HOURS to prepare his taxes, and I could have easily billed him twice that.

It pays to be organized when using a professional preparer. You can save a lot of money just by giving them(us) information in the format we can use it in. That stack of gas receipts you want to claim for your business use of your car?? If you add them up it might take you an hour. If *I* add them up it might take me half an hour… and cost you $75. Is that worth more or less than an hour of your time?

The price comparisons can be misleading between online tax software. For instance, both Turbo Tax and Tax Act offer free versions. However, Turbo Tax’s free version only really applies to a simple 1040 or E.Z. With Turbo Tax, if you have any investment income or itemized deductions apply you are going to pay significantly more. Turbo Tax charges you extra when the tax return is more complicated. Further, it charges you extra for State filings. I used to pay about Sixty Dollars for Turbo Tax.

With Tax Act the most you pay is $17.95 including with a State Return. Further,with Tax Act you can file a complicated federal return for free.

One year I completed my taxes with Tax Act, Turbo Tax, and Tax Cut. I ultimately filed with Tax Act because the software did the job, and it was significantly less in cost. It also completed the FASA form for students seeking financial aid.

My income was pretty low last year due to getting hurt at work. If your income doesn’t pass a certain AGI threshold then you can file for free at online tax places like Turbo Tax Freedom Edition. I think the AGI limit is $31k or so.
In several states you also will be able to file state for free through the program.
I saw last year there were other reputable places offering the same thing.

I am astonished at the quoted prices for CPAs. I’m a CPA and I think I’m at rock-bottom with a minimum of $125. My hourly rate is $150/hour plus a small forms charge ($5 per return). I can be cheaper than H&R Block for clients who are organized. I only take a few new clients each year and so most of my clients are people I know well and have trained through the years.

I consider myself their “personal financial wellness advisor” and we meet in person and I go over all aspects of their finances. How much they’re spending on expense ratios in their mutual funds. Whether they’ve got disability insurance. The best place to save for college (the parent’s Roth IRA!) Most of my clients will get charged between $200 and $300 dollars. I typically save them at least that much each year. It’s sort of a point of pride to me to always be thinking of ways to save them money. (Note that I’m a regular reader of this blog.)

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